BoE to meet on Thursday

STERLING

The Bank of England meet on Thursday for their latest rate setting meeting and this could keep movements in the pound to a minimum before hand – GBP/USD was flat at 1.2590 this morning, although has dropped to 1.2550 this afternoon. Economists are predicting a 9-0 vote by the MPC although there is the risk of a dovish shift to closer align the BOE with the Fed and ECB.

US DOLLAR

The Dollar Index was little changed this morning at around 97.5 as it looked to consolidate Friday’s data driven gains ahead of Wednesday’s FOMC decision. Most economists expect policymakers to leave rates on hold although will be on the lookout for any signals that rates could be cut in July – Fed Fund Futures are currently pricing in a 70% chance of a twenty-five basis point reduction.

EURO

The Euro has had a slow start to the week with EUR/USD little changed at just above 1.12. Comments from ECB policymaker Benoît Cœuré may have limited any potential upside after he warned over the weekend that the constellation of prices in the bond market paints a picture of the global economy which is very bleak.

Euro Zone CPI and German ZEW are out tomorrow.

JAPANESE YEN

The Bank of Japan meet on Thursday where policymakers are widely expected to keep their stance unchanged. Movements in the Yen have been relatively muted of late with USD/JPY contained within the 108-109 range for the past six sessions.

May CPI figures are due on Friday alongside manufacturing PMI.

SWISS FRANC

The Swiss Franc saw some modest upside in the aftermath of Thursday’s SNB policy decision although EUR/CHF has struggled to make any meaningful move below the 1.12 handle.

Looking ahead, the SNB’s quarterly bulletin is out on Wednesday followed by trade data on Thursday.

AUSTRALIAN DOLLAR

The Australian Dollar was little changed at 0.6874 despite more bearish RBA calls overnight. Friday’s low at 0.6861 marked the lowest level for AUD/USD since early January.

The RBA minutes are due tomorrow ahead of manufacturing and service PMI on Friday.

NEW ZEALAND DOLLAR

The New Zealand Dollar has begun the week as the strongest of the G10 currencies, recouping some of Friday’s sharp drop. Trade headlines remain in focus while domestically, Wednesday’s Q1 GDP figures will be closely watched.

NORWEGIAN KRONE

Oil prices are also little changed and offering little direction and this could remain the case until Thursday’s Norges Bank meeting where policymakers are expected to hike twenty-five basis points.